Europtronic Group Ltd. : Europtronic Group releases 3Q 2013 financial results

THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF- YEAR AND FULL YEAR RESULTS

1(a)(i) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year

Consolidated statement of comprehensive income for quarter ended 30 September 2013. These figures have not been audited.

Revenue Cost of sales Gross (loss)/profit Other income

Other gains/(losses) - net

Expenses

- Distribution and marketing

- Administrative

- Finance

Loss before income tax

Income tax expense/(credit) Net loss

Other comprehensive income/(losses): Available-for-sale financial assets

- Fair value loss

Revaluation gain/(loss) on property, plant and equipment Currency translation differences arising from consolidation Other comprehensive income/(loss), net of tax

Total comprehensive losses

Loss attributable to:

Equity holders of the Company

Non-controlling interests

Total comprehensive losses attributable to: Equity holders of the Company

Non-controlling interests

Loss per share for net loss attributable to

equity holders of the Company (cents per share)

- Basic

- Diluted

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1(a)(ii) Addition information to the income statement

Profit/(loss) for the financial period ended 30 September is arrived at after (charging)/crediting the following:

	Group
9 months	9 months	%
ended	ended	Increase/
30/09/2013	30/09/2012	(Decrease)
US$'000	US$'000

Write back/(allowance) for inventories obsolescence	2,359	(1,309)	NM
Amortisation of intangible assets	(9)	(10)	(10.0)
Bad debts written off	-	(1,069)	(100.0)
Depreciation of property, plant and equipment	(1,629)	(1,116)	46.0
Foreign exchange gain/(loss), net	288	(70)	NM
Gain on disposal of an available-for-sale financial asset	51	64	(20.3)
Gain on disposal of property, plant and equipment	42	60	(30.0)
Loss on disposal of intangible assets Loss on liquidation of subsidiaries	(9) -	- (3,665)	NM (100.0)
Interest expenses	(1,928)	(1,343)	43.6
Interest income	100	136	(26.5)
Impairment for non trade receivable arising from liquidation
of subsidiaries	-	(737)	(100.0)
Intangible assets written off	-	(561)	(100.0)
NM: Not meaningful

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1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Statement of Financial Position ASSETS Current assets

Cash and cash equivalents Available-for-sale financial assets Trade and other receivables Inventories

Non-current assets

Available-for-sale financial assets Investments in subsidiaries Investment properties

Property, plant and equipment

Intangible assets

Total assets LIABILITIES Current liabilities

Trade and other payables Current income tax liabilities Borrowings

Non-current liabilities

Borrowings

Deferred income tax liabilities

Total liabilities NET ASSETS EQUITY Capital and reserves attributable to equity holders of the company Share capital

Treasury shares

Statutory reserve

Currency translation reserve Asset revaluation reserve Fair value reserve

Share option reserve

Accumulated losses

Non-controlling interests

Total equity

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1(b)(ii) Aggregate amount of group's borrowings and debt securities

(a) Amount repayable in one year or less, or on demand (b) Amount repayable after one year	Group
(a) Amount repayable in one year or less, or on demand (b) Amount repayable after one year	As at 30/09/2013	As at 31/12/2012
(a) Amount repayable in one year or less, or on demand (b) Amount repayable after one year	Secured	Unsecured	Secured	Unsecured
(a) Amount repayable in one year or less, or on demand (b) Amount repayable after one year	US$'000	US$'000	US$'000	US$'000
(a) Amount repayable in one year or less, or on demand (b) Amount repayable after one year	26,628 4,500	6,043 -	39,669 2,131	7,228 -

Details of any collateral

The credit facilities of the subsidiaries are secured by the leasehold properties of UPT Crypson
Component (Shanghai) Co., Ltd, as well as the freehold properties of Europtronic Taiwan Ind Corp.
In addition, it is also secured by fixed deposit and the personal guarantee provided by Mr Huang
Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung.

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1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Statement of Cash Flows Cash flows from operating activities:

Net loss before tax

Adjustments for:

- (Write back)/allowance for inventories obsolescence

- Amortisation of intangible assets

- Bad debts written off

- Depreciation of property, plant and equipment

- Gain on disposal of available-for-sale financial assets

- Gain on disposal of property, plant and equipment

- Gain on disposal of treasury shares

- Loss on disposal of intangible assets

- Interest income

- Finance expense

- Impairment of non-trade receivables arising from liquidation of subsidiaries

- Loss on liquidation of subsidiaries

- Intangible assets written off

- Currency exchange differences

Changes in working capital

- Inventories

- Trade and other receivables

- Trade and other payables

Cash generated from/(used in) operations

Interest received Interest paid Income tax paid

Net cash provided by/(used in) operating activities Cash flows from investing activities: Additions of property, plant and equipment Disposal of assets held for sale under FRS105

Disposal of available-for-sale financial assets

Disposal of intangible assets

Disposal of property, plant and equipment

Net cash (used in)/provided by investing activities Cash flows from financing activities:

Bank deposit pledged to bank

Bank deposit released from pledge

Disposal of treasury shares Loan from directors Proceeds from borrowings Repayment of borrowings

Proceeds from finance lease liabilities Repayment of finance lease liabilities Interest paid

Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents

Beginning of financial year

Effects of currency translation on cash and cash equivalents

End of financial year

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1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year

	Share capital	Treasury shares	Share option reserves	Statutory reserves	Fair value adjustment reserves	Foreign currency translation reserves	Revaluation reserves	Accumulated losses	Total	Non- controlling interest	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	43,950 - -	(426) 426 -	132 - -	1,586 - -	878 - -	549 - 84	9,875 - -	(45,343) - (2,698)	11,201 426 (2,614)	(71) - -	11,130 426 (2,614)
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	43,950	-	132	1,586	878	633	9,875	(48,041)	9,013	(71)	8,942
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	41,987 - -	(426) - -	132 - -	1,586 - -	(45) - -	89 - (15)	13,024 (1,264) -	(27,445) - (8,618)	28,902 (1,264) (8,633)	1,829 - (2,094)	30,731 (1,264) (10,727)
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	41,987	(426)	132	1,586	(45)	74	11,760	(36,063)	19,005	(265)	18,740
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	43,950 - -	(426) 426 -	132 - -	- - -	- - -	3,228 - -	- - -	(28,121) - (223)	18,763 426 (223)	- - -	18,763 426 (223)
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	43,950	-	132	-	-	3,228	-	(28,344)	18,966	-	18,966
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	41,987 -	(426) -	132 -	- -	- -	3,228 -	- -	(7,626) (5,237)	37,295 (5,237)	- -	37,295 (5,237)
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012	41,987	(426)	132	-	-	3,228	-	(12,863)	32,058	-	32,058
Group Balance at 1 July 2013 Disposal of treasury shares Total comprehensive income/(losses) for the period Balance at 30 September 2013 Balance at 1 July 2012 Revaluation reserve Total comprehensive income/(losses) period Balance at 30 September 2012 Company Balance at 1 July 2013 Disposal of treasury shares Total comprehensive losses for the period Balance at 30 September 2013 Balance at 1 July 2012 Total comprehensive income for the period Balance at 30 September 2012

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1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year

Not applicable.

1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year.

	9 months ended 30/09/2013	9 months ended 30/09/2012
Number of issued shares Less: Number of treasury shares Number of issued shares excluding treasury shares	786,444,154 -	677,609,154 (12,500,000)
Number of issued shares Less: Number of treasury shares Number of issued shares excluding treasury shares	786,444,154	665,109,154
Number of issued shares Less: Number of treasury shares Number of issued shares excluding treasury shares

1(d)(iv) A statement showing all sales transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.

	9 months ended 30/09/2013	9 months ended 30/09/2012
Balance brought forward Disposal of treasury shares Balance of treasury shares	12,500,000 (12,500,000)	12,500,000 -
Balance brought forward Disposal of treasury shares Balance of treasury shares	-	12,500,000
Balance brought forward Disposal of treasury shares Balance of treasury shares

2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice.

The figures have not been audited or reviewed by the Company's auditors.

3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter)

Not applicable.

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4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied

The Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the most recent audited financial statements as at 31 December 2012.

5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change

Not applicable.

6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

	Group
	30/09/2013	30/09/2012
Loss per ordinary share ("EPS") for the period based on net loss attributable to the shareholders (i) Based on weighted average number of ordinary shares in issue ; and	(0.58 cents)	(1.74 cents)
(ii) On a fully diluted basis	(0.58 cents)	(1.74 cents)

(i) EPS for quarter ended 30 September 2013 on existing issued share capital is computed based on the weighted average number of shares in issue during the period of 786,444,154 (30/09/2012 : 665,109,154) ordinary shares.

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year

	Group	Company
	30/09/13	31/12/12	Increase / (Decrease)	30/09/13	31/12/12	Increase / (Decrease)
Net asset value ("NAV") backing per ordinary share based on the total number of issued shares excluding treasury shares as at the end of the period reported on	1.15 cents	1.66 cents	(30.72%)	2.41 cents	2.49 cents	(3.21%)

Note:
NAV per ordinary share is computed based on number of shares in issue of 786,444,154 (31/12/2012 : 773,944,154) as at 30 September 2013.

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8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

Statement of Comprehensive Income (3Q 2013 vs 3Q 2012)

Group revenue decreased by 18.4% or US$6.4 million from US$35.0 million to US$28.5 million due mainly to weaker demand in the electronic components market.
Gross profit decreased by US$0.7 million and became gross losses of US$0.3 million due mainly to disposal of obsolescence inventories and lower selling prices of components in China as a result from the exchange fluctuation on USD against RMB.
Other income increased by 57.6% or US$0.1 million to US$0.3 million due mainly to rental income generated from the Group's properties in Shanghai.
Other gains increased by US$4.8 million to US$0.4 million due mainly a gain on disposal of investment shares in 3Q 2013 and a loss of contribution from the proposed liquidation of the Group's subsidiaries in 3Q 2012.
Distribution and marketing expenses decreased by US$5.1 million to US$0.6 million as a result of reversal of provision of obsolescence inventories following their disposal in 2013.
Administration expenses decreased by 25.1% or US$1.2 million to US$3.6 million due mainly to further reductions in staff headcount resulting from a cost cutting exercise undertaken by the Group.
Finance expense increased by 43.6% or US$0.6 million to US$1.9 million due to higher bank interest on foreign currency borrowings.
Income tax expense decreased by US$0.6 million to US$0.1 million, due mainly to operational losses in the Group.
Overall, the Group reported a loss after tax and before minority interests of US$4.6 million in 3Q
2013 compared to a loss after tax and before minority interests of US$13.8 million in 3Q 2012.

Balance Sheet

Cash and cash equivalents decreased by US$8.3 million in 3Q 2013 to US$5.8 million due to repayment of bank loans.
Available-for-sale financial assets decreased by US$0.1 million to US$0.001 million in 3Q 2013 after disposal of investment shares.
Trade and other receivables decreased by US$2.3 million to US$16.8 million in 3Q 2013 due to lower sales generated in 3Q 2013.
Inventories increased by US$0.7 million in 3Q 2013 to US$9.6 million due to lower sales in 3Q
2013.
Trade and other payables increased by US$5.9 million in 3Q 2013 to US$18.1 million due to longer credit terms extended by suppliers.
Current and non-current borrowings decreased by US$11.8 million in 3Q 2013 to US$37.2 million after repayment of bank loans.

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Cash Flow Statement

Cash flow from operations increased from a US$0.8 million deficit in 3Q 2012 to a US$5.0 million surplus in 3Q 2013 due mainly to better accounts receivable collection and longer credit terms extended by suppliers.
Cash flow from investing was reduced from a surplus of US$5.1 million in 3Q 2012 to a US$1.8 million deficit in 3Q 2013 due mainly to purchase of machinery in 3Q 2013 and disposal of office premises in Singapore in 3Q 2012.
Cash flow from financing improved from a US$ 5.7 million deficit in 3Q 2012 to a US$3.4 million deficit in 3Q 2013 due mainly to loan from the directors and decrease in bank deposit.
Overall, the Group recorded a net increase in cash and cash equivalents of US$0.5 million in 3Q
2013 compared to 3Q 2012.

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results

The results are in line with the item 10 of the company's results announcement for the period ended 30 June 2013 released via SGXNet on 7 August 2013.

10. A commentary at the date of the announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months

The electronic component market continued to remain soft and visibility for rebound is low.
Overall orders for the Group's manufacturing unit did not improve much as expected. Increased demand for industrial application film capacitors, was not sufficient to offset the loss of orders for general purpose film capacitors. Measures to reduce the cost of raw materials through integrating production of a key intermediate material were held back owing to space constraint at the existing facility in Suzhou. This will resolve after the Group's production facilities in Suzhou are relocated.
The Group's distribution business continues to face stiff competition, longer payment terms from customers and more stringent terms from suppliers. As such, the Group will scale down its distribution business.
Management will continue to explore all avenues to improve the financial position of the Group.

11. Dividend (a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on? None.

(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year?

None.

(c) Date payable

Not applicable.

(d) Books closure date

Not applicable.

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12. If no dividend has been declared/recommended, a statement to that effect.

No dividend has been recommended by the Directors for the third quarter ended 30 September
2013.

13. If the Group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect.

The Company does not have a general mandate from its shareholders for IPTs.

PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1, Q2, Q3 or Half Year Results)

14. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year.

Not applicable.

15. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments.

Not applicable.

16. A breakdown of sales.

Not applicable.

17. A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year.

Total Annual Dividend
	Latest Full Year (2013)	Previous Full Year (2012)
Ordinary Preference Total:	- - -	- - -

Confirmation by the Board pursuant to Rule 705(5) of the Listing Manual of SGX-ST.

On behalf of the Board of Directors of the Company, we, Huang Shih An and Huang Chuang Shueh Ou, hereby confirm to the best of our knowledge that nothing has come to the attention of the Board of Directors of the Company which may render the 3Q 2013 financial statements for the financial period ended 30 September 2013 set out above to be false or misleading in any material aspect.
On behalf of the Board of Directors of Europtronic Group Ltd

Huang Shih An Huang Chuang Shueh Ou

Chairman Vice Chairman
12 November 2013

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